William Ruehle leaves U.S. District Court in Santa Ana after his court appearance for arraignment in 2008. FILE PHOTO

A federal appeals court today reversed a judge's decision to exclude evidence from the upcoming trial of former Broadcom Corp. executive William Ruehle over an alleged $2.2 stock options backdating scheme, ruling that Ruehle's statements to company lawyers were not made in confidence.

The 9th U.S. Circuit Court of Appeals panel – consisting of U.S. Circuit Judges Raymond C. Fisher, Ronald M. Gould and Richard C. Tallman – found that the company's former chief financial officer "failed to meet his burden of establishing the existence of an individual attorney-client privilege" regarding June 2006 conversations he had with Broadcom lawyers.

The ruling overturns the opinion of U.S. District Judge Cormac Carney, who in April disallowed prosecutors from using the conversations in their case. Carney said Broadcom's attorneys – from the firm Irell & Manella – committed ethical misconduct and violated the attorney-client relationship by giving federal investigators notes from interviews with Ruehle.

The government appealed Carney's decision, which resulted in today's ruling.

Ruehle "tries to minimize the damning evidence confirming his awareness that his interactions with Irell would not be held in confidence,'' and said he was "shocked" by the disclosure of the conversations to the government in 2008, according to the opinion, written by Tallman.

"Ruehle was no ordinary Broadcom employee ... As the head of finance, Ruehle cannot now credibly claim ignorance of the general disclosure requirements imposed on a publicly traded company with respect to its outside auditors or the need to truthfully report corporate information to the (U.S. Securities and Exchange Commission),'' Tallman wrote.

The appeals court determined Carney erroneously applied a "liberal" view of the attorney-client privilege based on state law, as opposed to applying a stricter, federal interpretation that places the burden on Ruehle to prove the communications was privileged.

Ruehle – along with Broadcom co-founder Henry T. Nicholas III – was indicted last year on charges of conspiracy, securities fraud and wire fraud. They allegedly engaged in a backdating scheme that resulted in Broadcom's restatement of earnings to account for $2.2 billion in additional stock-based compensation expenses.

Federal prosecutors can now opt to use the notes from the conversations in Ruehle's jury trial, which is scheduled to start Oct. 20.

Nicholas goes to trial after Ruehle. He also faces separate drug charges.

Henry Samueli, Broadcom's other co-founder, awaits sentencing after pleading guilty to one count of making a false statement to the Securities and Exchange Commission.

User Agreement

Keep it civil and stay on topic. No profanity, vulgarity, racial
slurs or personal attacks. People who harass others or joke about
tragedies will be blocked. By posting your comment, you agree to
allow Orange County Register Communications, Inc. the right to
republish your name and comment in additional Register publications
without any notification or payment.